7/12/14 328 Chapter 14 Flashcards - ProProfs

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Home Take Flashcards Set 81 328 Chapter 14
328 Chapter 14
35 cards
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Created Sep 13, 2012
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1 liabilities
probable future sacrifices of economic benefits
arising from present obligations of a
particular...
2 indenture
agreement incorporates the terms of the issue
and restrictions
3 bond indeture
promise by the borrowwer to the lender to pay
a sum of money at the date, and periodic
interest...
4 covenants and restrictions protect both lenders and borrowers
5 discount
(issue price) stated rate < effective rate (face
value)
6 premium stated/issue price > effective rate/ face value
7 effective interest method
allocates the discount or premium in increasing
amounts over the bond term
8 straight-line method
allocates the same amount of discount or
premium to each interest period
9 discount contra liability
10 premium adjucnt account
11 interest rate and bond price inversely related
12 deferred charge bond issuing cost
13 transaction costs directly reduce the carrying value of the debt
14 fair value and book value same only when issued
present value of its expected future cash flows
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15 interest and principal consists of
16 stated also known as the coupon or nominal rate
17 effective rate
also known as the effective yield or market
rate
18 increases
amortization of a discount __________
interest expense
19 decreases
amortization of a premium __________
interest expense
20 effective interest method matches expenses with revenues better
21 liability account discount and premium is what type of account
22 zero interest bearing note present value measured by the cash received
23 zero interest bearing note
amount of the discount represents the expense
that will incur on the note over the life of...
24 mortgage note payable
a promissory note secured by a document
called a mortgage that pledges title to property
as...
25 mortgage note no premium or discount involved
26 fair value
reflects the current cash equivalent value of
financial instruments
27 unrealized holding gain or loss
net change in the fair value of the liability from
one period to another
28 fair value bonds and notes recorded at
29 off balance sheet financing
an attempt to borrow monies in such a way to
prevent recording the obligations
30 non consolidated subsidiary
subsidiary company that is less than 50%
owned, therefore does not report the assets
and liabilities...
31 special purpose entity (SPE) to perform a special project
32 operating leases
instead of owning the assets companies lease
them
33 troubled debt restructuring
when a creditor for economic or legal reasons
related to the debtor's financial difficulties...
34
settlement of debt < carrying value(BV) OR
mod terms
troubled debt restructuring transactions
35 settlement of debt (record at Fair value)
transfer of non cash assets or issuance of
debtors stock
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